GOP seeks leverage in talks over debt ceiling hike

Washington  It was a tough-talking House Speaker John Boehner who warned Wall Street this week that Congress won’t raise the government’s debt ceiling without massive spending cuts that most Democrats oppose.

The swagger struck some as odd. The Ohio Republican, after all, has said failure to increase the borrowing limit this summer would trigger a financial disaster for the United States and the world.

But allies say Boehner had multiple motivations for insisting on trillions of dollars in spending cuts, and no tax increases, as the price for rounding up enough votes to allow more borrowing and prevent the country from defaulting on its debt.

For one thing, public opposition has forced Republicans to de-emphasize their proposals to convert Medicare to a less costly voucher program. A more adamant stand on spending cuts could help compensate for that setback, according to members of both parties.

Experts warn that a default would be an unprecedented event that could cause economic chaos, shaking global confidence in the U.S. government and forcing it to pay higher interest rates when it borrows money. Nevertheless, polls show that Americans strongly oppose increasing the debt ceiling. Sixty-three percent of those surveyed in a CBS News poll in April were against raising the limit.

During Congress’ recent two-week recess, angry constituents warned scores of GOP House members not to increase the borrowing limit.

Flake, who is running for the Senate, said his fellow Republicans were a bit tentative this spring in demanding deep spending cuts when Congress voted on a package to keep the government running through the fiscal year that ends Sept. 30. Had the government shut down, he said, public resentment “probably would have fallen on us,” just as it fell mainly on House Republicans in the shutdowns of 1995-96.

But Flake argues that the more complex issues surrounding the nation’s ability to borrow money and repay its loans fall more heavily on the president, the government’s chief executive.

“This is more the White House,” he said, and that gives Republicans leverage in negotiations.

And so an emboldened Boehner told the Economic Club of New York on Monday: “Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase.”

Adding a new demand, Boehner said the cuts “should be greater than the accompanying increase in debt authority the president is given.”

Many took that to mean spending cuts of at least $2 trillion, the amount of new borrowing needed to get the government through the 2012 elections. Boehner’s staff, however, said the speaker deliberately avoided giving a number. And they declined to say whether Boehner envisions a 10-year time frame for the savings, or something else.

The Obama administration suggested Boehner is merely staking out an early negotiating stance that he knows will not hold when it’s time to compromise with the Democratic-controlled Senate and White House.

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During Bush Presidency, Current GOP Leaders Voted 19 Times To Increase Debt Limit By $4 Trillion
After pushing the government to brink of shutdown last week, Republican Congressional leaders are now preparing to push America to the edge of default by refusing to increase the nation’s debt limit without first getting Democrats to concede to large spending cuts.
June 2002: Congress approves a $450 billion increase, raising the debt limit to $6.4 trillion. McConnell, Boehner, and Cantor vote “yea”, Kyl votes “nay.”

May 2003: Congress approves a $900 billion increase, raising the debt limit to $7.384 trillion. All four approve.

November 2004: Congress approves an $800 billion increase, raising the debt limit to $8.1 trillion. All four approve.

March 2006: Congress approves a $781 billion increase, raising the debt limit to $8.965 trillion. All four approve.

"The current deficits stem largely from three sources—the Bush tax cuts, the two wars that were fought on the tab, and the Great Recession that cratered tax revenues and lifted spending on everything from unemployment to food stamps to the recovery spending. Boehner argues that "adding nearly a trillion to our national debt—money borrowed mostly from foreign investors—caused a further erosion of economic confidence in America." But he ignores the trillions added to the debt by the Bush tax cuts, the wars and the Great Recession, focusing only on the Obama recovery spending, which made the smallest contribution of all of these to the deficits. And, he rules out reversing the top-end tax cuts or cutting the military spending to address the deficits that they helped to create. (And if we actually adopt his policies, he's likely to extend the Great Recession as well)."

And it should not be forgotten that the Great Recession was created by the greed and corruption on Wall Street, not by anything Main Street or public employees did. But it's the average Joe and Jane who are being asked to pay for all of the above idiocies that created the deficit, while the fat cats continue to see their profits and fortunes increase dramatically.